URUGUAY OPEN ROUND

EXPLORACIÓN Y PRODUCCIÓN DE HIDROCARBUROS OFFSHORE

Promising results of the Uruguay Round Open

As a result of the Open Uruguay Round process, approved by Decree 111/019, two quali�cation requests were received by Kosmos Energy and Tullow Oil in the �rst Instance of 2019. The quali�cation of compa-nies for the selection process is valid for 5 years, thus being able to present offers. Afterwards, two offers were received from Kosmos Energy, corresponding to the offered areas OFF-2 and OFF-3.

The offers presented by Kosmos Energy include:

Offshore areas’ map for Open Uruguay Round

Area OFF-2 Area OFF-3

• Evaluation of Petroleum Geology• Evaluation of Prospective Resources• Gravimetric and Magnetometric 3D inversion

and modelling • Acquisition, Processing and Interpretation of

5900Km2 of 3D seismic• Licensing existing data

• Evaluation of Petroleum Geology• Evaluation of Prospective Resources• Gravimetric and Magnetometric 3D inversion

and modelling • Acquisition, Processing and Interpretation of

5100Km2 of 3D seismic• Licensing existing data

Total Working Units: 12164 Total Working Units: 10564

EXPLORACIÓN Y PRODUCCIÓN DE HIDROCARBUROS OFFSHORE

After multiple data rooms with Kosmos Energy, which began within the framework of the Uruguay Round 3 in 2017, its interest materialized through the offers presented.

As a result of the contracts corresponding to the Uruguay Round 2009 and the Uruguay Round II, an extensive database was generated, which contributed to adding value to the offshore basins of Uruguay. The offers constitute a milestone and this result supports the vision of ANCAP’s technical team on the remaining prospectivity of Uruguayan offshore basins.

With these offers the reactivation of the exploratory activity in Uruguay is achieved, in a new context of great availability of geological and geophy-sical information of the offshore basins, by an outstanding operator in the Atlantic margin exploration and with very signi�cant proposed explo-ratory work.

Open Uruguay Round

This Open Uruguay Round system accomplishes with the most valued factors by oil companies at the moment of participating in a bidding round: transparency in the process of decision making, previously availa-ble database and a clear and predictable schedule.

In this continuously open process, companies can qualify and submit offers at any time. However, the system doesn’t imply a direct negotia-tion, it constitutes two bidding rounds per year, with opening of offers twice a year: the last working day of May and the last working day of November. The schedule of Open Uruguay Round is shown in the following table:

Activity Proposals in the 1st Instance Proposals in the 2nd Instance

Presentation of Letter of Interest and documents for the qualification of Oil Operations Companies

Until the last business day of April Until the last business day of October

Notification of Oil Operations Companies Qualification

Until the second to last business day of May

Until the second to last business day of November

Submission of proposals Until the last business day of May at 2:00 p.m., local time

Until the last business day of November at 2:00 p.m., local time

Opening of proposals Last business day of May at 2:30 p.m., local time

Last business day of November at 2:30 p.m., local time

Definition by ANCAP of the winning proposal of each Area (*)

No later than the last business day of August

No later than the last business day of February

(*) Notes: The signature of the Contract is subject to the approval of the Executive Power.

EXPLORACIÓN Y PRODUCCIÓN DE HIDROCARBUROS OFFSHORE

The contract model approved in the Open Uruguay Round regime is similar to typical Production Sharing Contracts (PSC) widely used in the industry, for which Contractor assumes all risks, costs and responsibili-ties of the activity. No royalties or bonuses of any kind are applied. The Exploration Period, which has a term of up to 11 years, is divided in three exploration phases and companies could have an area for 6 years before committing to drill exploratory wells. The term of the complete contract including the Exploitation Period is 30 years, which could be extended for 10 additional years if requested by the Contractor for justi�ed reasons and approved by the Executive Branch.

Regarding the Contract economy, the production income is divided in three portions: Cost Oil, Pro�t Oil for the Contractor and Pro�t Oil for the Uruguayan State. The Contractor is allowed to recover the Cost Oil (operating and capital costs) from gross income before sharing the production pro�t.

The Pro�t Oil is the portion of production remaining after the Cost Oil has been deducted. It is split by the State and the Contractor on the basis of a sliding scale by which the State share increases as the relationship between gross income and total costs increases.

ANCAP has a back in option, which means that, after the commerciality of a discovery is declared, it has the right to take up a working interest in the project development. ANCAP’s participation ranges from 20% up to a maximum that is also biddable.

ANCAP is currently holding meetings and data rooms with different interested companies for the next instance of November. They can be coordinated through the registration form available in the following link: https://exploracionyproduccion.ancap.com.uy/innovaportal/-

v/2567/3/innova.front/registration-form.html

The bidding round terms and contract model, as well as the available areas map can be accessed through https://exploracionyproduccion.ancap.com.uy/innovaportal/-

v/7259/3/innova.front/open-uruguay-round.html